The macro-economic meaning of commodity price surge in this chapter refers to the price of oil-the average price per barrel has increased by $5 on the level of 27. If the oil price continues to increase in the future, it will inevitably affect the increase of global demand. In a broader sense, the fluctuation of commodity prices is affecting the balance of budgets, transactions and inflation, and of course, it will also affect the living standards of almost all parts of the world. In the first few years of the 21st century, the rising commodity prices only had a moderate impact on the macro-economy, because the price increase was triggered by a global inflation. In developed economies, economic growth remained stable in 26, at around 3.%, and in 27 it was 7.%, and this kind of inflation was controllable. However, inflation has now caused food and energy prices to rise. In fact, people's real income after tax deduction has been greatly reduced. Recently, in Europe, the inflation rate has reached as high as 3.6%, and in the United States it has reached as high as 4.%, while economic growth has obviously slowed down. Complex financial policies have established a good relationship between curbing inflation and ensuring demand, and the real "manipulator" is the large central bank.

"Oil prices will gradually affect budget allocation, trade balance, inflation and people's living standards."

in emerging economies, this concept was first put forward by Antoine van Agtmael, a world banker, in the 198s. This word is often used to replace emerging economies, but in fact, its real meaning lies in expressing an economic phenomenon, which cannot be fully expressed or delineated by emerging economic markets or economic strength in the geographical sense, such as those regions that are considered to be transforming from developing countries to developed countries. These economies include China, India, Pakistan, Mexico, Brazil, Chile, Argentina, Peru, most of Southeast Asia, Eastern European countries, the Middle East, some African and Latin American countries. This division emphasizes the characteristics of mobility, and political scientist lan Bremmer defines emerging markets as "a country whose market is mainly influenced by economy rather than politics". Rising commodity prices have had a great impact on inflation, and rising prices have directly affected people's spending power. Among all emerging economies, the inflation rate rose by one percentage point in 27, and rose by one percentage point again in 28. Many countries, especially commodity exporting countries, have made obvious profits from the increase in income. Budget allocation and trade surplus have increased, and foreign exchange reserves have also increased. Just like the latest issue of World Economic Outlook Source: WED, 28. As predicted in China, the GDP of the Middle East and Africa will increase by 6.1% and 6.3% respectively, which is largely caused by high commodity prices, but in some advanced economies, prices have fallen sharply. However, for some economies, huge domestic demand and active foreign trade have attracted people's attention to the rapid development (overheating), and people pay more attention to it in countries closely related to the declining exchange rate of the US dollar. For emerging economies, the surge in commodity prices has had a negative impact. Those pure commodity importing countries have experienced the shortage and recession in budget allocation and transaction balance, as well as the sharp decline in after-tax income and serious inflation (see the situation of rising oil prices shown in the table below).

"The combination of the depreciation of the US dollar, the fall of short-term interest rates and the interruption of the global futures market has enhanced investors' interest in oil and other products as an alternative asset."

The current fluctuation of food prices is more harmful to poor countries that spend 4% of their expenditure on food. On the whole, commodity prices, especially food and energy prices, have reached the point where they are becoming a potential danger to the global economy. Therefore, this is a problem that needs to be faced by the whole world. The formulation of national policies must take into account multiple difficulties. In this regard, there are two unfortunate examples of failed international measures, which directly led to the total decline of domestic market prices. The reason for this result lies in a recent strict export restriction imposed on rice exporting countries and protective barriers set up to stimulate biofuel production.

another important feature is to increase supply in view of rising prices. This brings us to the topic of this chapter-how to promote investment in oil. The policy of increasing investment in the oil industry is imminent. Oil has become a key input in every link of commodity and commodity production and sales. Therefore, increasing the supply of oil and improving the stability of the oil market will have a beneficial impact on the prices of other commodities, government personnel and market participants. With the slowdown of global economic growth, the market hopes that the oil price will drop to the level of $8 per barrel after October 27. In fact, the oil price continued to soar, once exceeding the $135/barrel mark, which was the first time that the supply of oil was in short supply after the overcapacity in the past 2 years. The development of those developed economies is slowing down, while emerging market economies have become the main driving force for demand growth. In the past 1 years, China, Indian and Middle East alone accounted for one-third of the total global oil consumption. Therefore, even if the global economic growth rate decreases by one percentage point in 28, we still hope that the oil demand in these emerging markets will continue to maintain room for growth. When there is still room for growth in oil demand, the supplier has the responsibility to bring down the rising oil price. In recent years, especially in some non-OPEC countries, such as Mexico, Russia and Britain, many supply items have been routinely revised and reduced. Because the buffer measures in commercial and economic activities have almost existed in name only, the oil market is extremely sensitive to new supply disruptions or geopolitical events. In this year, financial factors refer to high oil prices, the depreciation of the US dollar, the decline in short-term interest rates and the interruption of the global credit market. It played an important role in the soaring oil price. In fact, in the first quarter of 28, the assets and funds flowing into the commodity sector have increased significantly. According to the traditional investment concept, most investors will buy assets with rising prices. Looking ahead, we hope that with the slowdown of global economic development, oil prices will remain at a moderate level. However, the expected price reduction can only partially alleviate the impact of the cumulative increase we have seen in the past few years.

fundamentally speaking, oil prices may remain at a high level, because market conditions may remain tense. In fact, OPEC's surplus production capacity is only about half of the average between 1996 and 27, and OPEC may limit its production capacity to less than a quarter of the average between 1996 and 27 for a period of time. In this context, the investment in petroleum industry refers to the investment ratio of petroleum, natural gas and petrochemical industry (Coen, 1997). It has become an important measure to improve the balance between supply and demand and can make the market more stable. In recent years, the amount of capital expenditure began to increase rapidly, which, as predicted, led to the rise of prices. However, the research of the International Monetary Fund shows that this can only increase productivity moderately. More specifically, from 22 to 26, the investment in the name of the oil industry increased by about 6%, but in fact, there was no change in the investment in the oil industry during this period.

the explanation of slow investment-what is the real explanation of inefficient investment? In short, investment is influenced by cyclical, technical, geological and policy factors. As far as the first cyclical factor is concerned, the cost of exploration and development is very important, which reflects the specific degree of productivity constraint in this field and the slow effect of low-intensity investment and productivity stagnation after 15 ~ 2 years. Generally speaking, productivity constraints are mostly related to some unexpected rapid global expansion and the sharp rise in the prices of many commodities in the past few years, that is, they are closely related to the pressure of price increases. Higher prices mean higher capital expenditure (in dollars). Some price increases are related to technical and geological factors.

"The scale of new oil fields is small, but it faces great challenges in engineering technology and geology. In some important areas, the production of developed oil fields is declining faster than previously expected.

This means that the investment in oil exploration and production in new oil fields is higher than that in old oil fields, that is, the average investment in exploration and development in new oil fields will double: from $5 in 2 to $1 in 27, and for those marginal oil fields, the investment cost is close to $2. "

in the whole investment, a larger share is used for the production of mature oil fields, while the real investment for overall productivity is less. The first is the investment environment and management mode of the country where the oil field is located. In particular, the comprehensive analysis of the investment of oil companies further shows that these companies invest more in countries with better investment environment and management status. This trend is true even if the investment cost of exploration and development in these countries is higher than that in other countries. Second, policy uncertainty will hinder investment. The increasing risk of nationalism in resource countries and frequent changes in contract terms for foreign investors in recent years will have a negative impact on actual oil and gas production. However, this will also affect the current investment and engineering projects. Because of the unexpected interruption of production, it will affect the future investment and may also reduce the investment in engineering projects. For industries with long-term planning, the long-term benefits of investment are paid more attention. When the policy change is considered to be autocratic or directed at foreign investment, the impact is particularly far-reaching. Third, comprehensiveness and limitations can affect different types of investment behavior. Our research has found the source of investment behavior data: Theodoropoulos, 1999; Koen，2。 It will not be obviously affected by the nature of the company (public ownership or private ownership). In fact, the investment of some large export-oriented national oil companies is very rapid, and in some cases, these companies have received official support from their host countries. On the contrary, some small companies (whether private or public) are not interested in real investment behavior, because it will automatically increase the investment cost and make geological exploration more difficult. At the same time, some more traditional inward-looking state-owned companies do not agree to expand the scale of investment. In some cases, they are only keen to maintain their production capacity. In many cases, the problem comes from the strict legal provisions prohibiting cooperation with foreign counterparts, which is a double-edged sword and hinders scientific and technological exchanges.

"A stable and predictable investment system will help to support sufficient investment and ensure future supply."

Like other commodity markets, the basic policy guarantee can definitely promote the substantial balance between supply and demand. In economics, supply and demand describe the expected market relationship between the seller and the buyer of a commodity. Supply and demand patterns indicate the quality and price of goods sold in a market. This model is the basis of microeconomic analysis, and it is also used as the basis of other economic models and theories. This relationship predicts that in a competitive market, the price will have the function of balancing the demand of consumers and the supply of producers, which can form an economic balance relationship between price and commodity quantity. The combination of this model and other factors that can change this balance can indicate the change of demand and supply. These policies have strengthened market forces and the structural framework needed for correct operation. In this way, it is necessary to allow oil prices to become a symbolic role affecting supply and demand. No matter whether state-owned or private companies conduct oil and gas exploration, government departments should strive to ensure the fair implementation of laws and the transparency and predictability of taxation, and provide support for expanding energy supply and infrastructure construction. Sudden changes in the contract or tax system by the government concerned will increase the uncertainty of policies and threaten future investment. These changes will do more harm to industries with long investment cycles. When the contract or tax system lacks conventional market conditions, it is necessary to renegotiate the contract, which should ensure transparency and be carried out in accordance with commercial laws. Fortunately, the oil industry has such a variable structure, and this advantage is conducive to the development of larger-scale cooperation and synergy between the state and multinational oil companies. The optimized cooperative relationship can complement each other, so it can increase the overall investment in the petroleum industry. At present, some national oil companies have a large amount of oil resources on the earth, and multinational oil companies are engaged in further exploration operations, mainly in the form of technology shares to participate in oil and gas exploration and development in the countries concerned. Similarly, the governments of oil-producing countries will provide a more stable and transparent investment environment for multinational companies and provide management standards for their state-owned oil companies.